Mexico City. Monetary policy continues to be the main tool to contain inflation, however, implementing alternative policies may imply adverse side effects, said the International Monetary Fund (IMF).
“Inflation can increase, but a stricter policy can reduce it quickly,” the agency declared in the document The big squeeze: Perspectives on the recent episode of inflation, which is part of its Economic Expectations Report.
“The use of alternative tools requires care, evaluation of their effectiveness and compensation to minimize possible adverse side effects,” stated the IMF in the analysis carried out by its researchers Emine Boz and Jorge Álvarez.
In the report released today, one week before the annual meeting of the International Monetary Fund (IMF) and the World Bank, which will be held from October 21 to 26 in the city of Washington, where leaders of governments, companies and international organizations will gather , the organization explained that countries have used more tools to stabilize inflation when monetary policy is limited.
He commented that although the fiscal stimuli that both developed and emerging countries incorporated during the covid-19 pandemic were essential to contain the economic consequences, they also generated imbalances between supply and demand, which stimulated the increase in inflation. .
“The pandemic caused widespread shutdowns in economies, causing many companies to lower their production,” the report mentions.
It is stated that as companies began to reopen, consumer demand for goods increased, while producers had difficulty increasing supply at the pace of demand. This, amid continued supply chain disruptions, leading to price pressures in the goods sector.
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